Glancing at my notes from the World Economic Forum’s meeting at Davos back in 2013, I see that it was dominated by deep concerns about the impact of technology on work. The question was whether technological ingenuity would somehow be the downfall of our human way of living. I don’t think anyone understood the exact mechanisms by which the impact of human technologies would play out, but there were palpable concerns that all might not be positive.
Within a few years, these vague concerns were beginning to take shape. By the Davos meeting in 2017, the consequences of technology on work were becoming clearer, with some labor economists making predictions that millions of people could lose their jobs and could potentially be replaced by AI or robotics. Upskilling to perform the more human aspects of work or adjacent skills, or reskilling to completely different types of work, began to emerge as the only pathways toward ensuring that everyone would continue to have opportunities to work.
If 2013 was the year of concerns and 2017 the year of consequences, then 2020 is the year of commitments. At Davos this year, an initiative called the Reskilling Revolution was launched that saw both companies and governments pledging to reskill and upskill 1 billion people across the world by 2030.
Behind the public pledges to help retrain workers in this new economy, there are nagging “Why bother?” questions from all the stakeholders that threaten to derail the efforts. These questions include:
- Why would a company pay for someone to be upskilled when that person could walk out of the door with the newly acquired skills — and, more important, take these skills to a competitor?
- Why should a government pay for someone to be upskilled when it is not clear that those new skills will make a positive impact on his productivity and therefore the health of the economy — particularly at a time when there are other competing asks, such as health care, on the public purse?
- Why would a worker be motivated to be reskilled when she doesn’t have the time or the money and when she cannot anticipate whether the skill she’s acquiring will make her more marketable? (Data from the Organisation for Economic Co-operation and Development suggests that after age 35, people are less likely to be motivated to upskill or reskill.)
I was thinking about these questions at an unrelated panel at Davos that discussed the profound implications of increasing global temperatures on the melting of the arctic ice. There was wide agreement that something had to be done — and done fast. But a major fund investor on the panel asked two crucial questions: “Why would anyone act? What are the incentives to change behavior?”
His questions were unpopular, but I think he made a fundamental point on the issues for climate change — and, indeed, for reskilling and upskilling as well. What are the motivations to change?
The Critical Role of Incentives
It seems to me that if the pledges being made to upskilling are to be realized, then the questions of what will incentivize those pledges have to be addressed head-on.
Here are four types of enticements for committing to upskilling that were discussed at Davos in 2020:
Fiscal incentives. Right now, in many tax jurisdictions, investing in robotics and AI has an accounting advantage over investing in people. Changes in national corporate tax structures may be necessary so that, from an accounting perspective, money a corporation spends on training is considered a capital expense, in the same way that investment in machinery (such as a robot) is currently.
Fiscal support. Governments can make available to their citizens an individualized learning account, which is a sum of money to be spent at individuals’ discretion. This is an incentive that the governments of both Singapore and France are engaging with.
Reporting incentives. There is the question of what will keep companies accountable for the pledges they make on spending on reskilling or the number of people they upskill or reskill. The French outsourcing company Adecco, for example, has publicly committed to upskilling 5 million people by 2030. But how will this be measured? One possibility is an initiative launched by the World Economic Forum’s International Business Council to have companies publicly report on 22 nonfinancial measures, including training expenditures.
Signaling incentives. Government can encourage worker interest and motivation in reskilling by providing clearer information about future job trends. The German labor ministry is developing this signaling incentive by highlighting, through its job centers, the probable locations and categories of job loss and job creation.
There is broad agreement that those billions of workers whose jobs have been affected by technology deserve a chance at reskilling. And there is a growing consensus about how this can be achieved. Yet without acknowledging and strengthening the mechanisms of these four potential incentives, there is a danger that the commitment conversation simply goes around in circles. Supporting, measuring, and sharing trends about reskilling are crucial steps to embrace right now.
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This content was originally published by MIT Sloan Management Review. Original publishers retain all rights. It appears here for a limited time before automated archiving. By MIT Sloan Management Review